PracticeAuditKPMG partners hit with record fines

KPMG partners hit with record fines

SEC hands out largest ever penalties to individual auditors over Xerox fraud case

Record fines have been handed out by the US Securities and Exchange
Commission to KPMG partners for their part in the fraudulent schemes at office
equipment maker Xerox.

Ronald Safran and Michael Conway agreed to pay fines of $150,000 each, the
largest ever handed out to an individual auditor, while a third, Anthony
Dolanski pays a civil penalty of $100,000.

The three partners also agreed to permanent injunctions and a suspension from
practice. A fourth partner, Thomas Yoho, agreed to be censured by the SEC.

The long running case against Xerox and its auditors saw the SEC allege that
the company illegally manipulated the accounting for leases of Xerox equipment
to close the gap between its actual earnings and market expectations. KPMG and
the partners are accused of signing off unqualified accounts when they knew or
should have know about the manipulations, which eventually resulted in $3bn of
restated revenues.

So far the cases the SEC has brought have resulted in $55.2m of penalties and
disgorgement.

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